Courtney Webster had gone to CDI’s Carmel center in November 2014, and the day after she was given a CT scan, Dr. Brian Walker issued a report finding no masses, despite images showing a mass indicating rectal cancer. By the time Webster’s cancerous mass was diagnosed nearly a year and a half later, it had metastasized and spread to her lungs and liver.

The couple sued Center for Diagnostic Imaging, Inc., doing business as CDI Indiana LLC, alleging the Carmel imaging center failed to identify Courtney’s tumor, severely reducing her chances of surviving cancer. The federal court jury ruled in her favor and awarded damages more than 10 times those allowed under Indiana’s medical malpractice caps.

“We agree with the district court’s analysis and so we affirm,” Circuit Judge Amy St. Eve wrote Wednesday for the three-judge appellate panel in Chicago.

That analysis by Indiana Southern District Chief Judge Jane Magnus-Stinson largely had to do with whether CDI was subject to Indiana’s $1.25 million cap on damages under the Indiana Medical Malpractice Act. But the facts of this case permitted litigating in federal court outside those state limitations.

“In October 2016, the Websters filed this medical malpractice lawsuit against CDI in federal court based on diversity jurisdiction. That is not the norm for Indiana medical malpractice claims,” St. Eve wrote. “Typically, such claims fall under Indiana’s Medical Malpractice Act … which limits liability for registered qualified health care providers and requires the presentation of a proposed complaint to a medical review panel before an action can be commenced in court.”

But here, defendant CDI had not registered as a qualified health provider to take advantage of the IMMA’s caps on damages.

“In a well-reasoned and thorough opinion, the district court concluded that the Supreme Court of Indiana’s apparent agency holding in (Sword v. NKC Hosp., Inc., 714 N.E.2d 142, 152 (Ind. 1999)) applied to the circumstances of this case,” the 7th Circuit observed. The Sword court held that a medical provider is liable if a patient reasonably relied on its apparent authority over the wrongdoer.

Walker was a radiologist hired as an independent contractor by Medical Scanning Consultants, which provided radiologists to CDI to interpret its medical imaging. Both Walker and MSC had registered as qualified health care providers under the Indiana Medical Malpractice Act, and therefore were shielded by the $1.25 million medical malpractice damages caps, unlike CDI. The parties stipulated that MSC does business as CDI and uses the CDI related trademarks to assist in marketing as part of a national provider network.

However, “Courtney, in fact, believed CDI had provided the health care services in relation to her November 2014 CT scan,” the 7th Circuit noted. “CDI’s argument that Dr. Walker was an independent contractor hired by MSC, therefore, is of no moment unless Courtney was aware of any such contractual relationship.

“… Accepting CDI’s contrary argument would mean that health care facilities could easily evade liability by using independent contractor professional organizations to employ physicians,” St. Eve wrote. “Put differently, a medical center cannot hold itself out to the public as offering health care services — and profit from providing those health care services — yet escape liability by creating a complex corporate arrangement of interrelated companies. We are hard-pressed to believe Indiana law would favor that result.”

Indianapolis attorney Jerry Garau argued for the Websters before the 7th Circuit, and attorney Kathleen DeLaney is among the legal team representing the couple. She said in a statement, “We are very pleased with the Court of Appeals decision, which came in near record time. While the outcome of the case is very positive, it does not undo the tragedy that the Webster family has suffered and will continue to suffer.”

Indianapolis attorney Jay Peters of Plunkett Cooney PC represented CDI and argued before the 7th Circuit. He did not immediately respond to a message seeking comment.

Dave Stafford joined the staff of the Indiana Lawyer as a reporter in May 2012 and was named editor in October 2017. An award-winning print journalist for more than 30 years, Stafford has worked as a reporter and editor at newspapers including the Herald Bulletin in Anderson, Indiana, the News-Journal in Daytona Beach, Florida, and the Times-Dispatch in Richmond, Virginia. He and his wife, Denise, live in their hometown, Indianapolis.